March 8, 2009

Dogs have no money. Isn't that amazing? They're broke their entire lives. But they get through. You know why dogs have no money? ... No pockets. --- Jerry Seinfeld

Money is energy.

The value of money comes from what it does.

What you give, you get back 10 fold.

So carry lots of cash. I've heard this advice several times.

Who Needs Cash Anymore?

I don't use cash much. Do you? I like having a minimum of $100 and a target of $140-$160. That's more than enough for expenditures that don't take credit cards. Or places like taxis where I don't feel comfortable using plastic. I don't use debit cards, following the advice of Frank Abagnale in Stealing Your Life. You may recall that Leonardo Dicaprio played Frank in the film adaptation of Catch Me If You Can.

During the Canadian winter, there's little for an insider to do. So I tried this experiment and ran into an immediate snag.

The Problem

My bank keeps cutting my daily cash withdrawal limit. I'm not a bad risk. These reductions are meant as protection from fraudulent activity. Originally $1,000 got cut to $500 and is now down to $300. Collecting $1,000 means visiting on four different days, which is arduous. Even worse, the bank machine spews $20 bills. Who wants to carry 50 (or more) pieces of germ-infested paper? I stopped making withdrawals after two days, which may negate the results.

The Results

Carrying extra cash has three positive advantages.

You feel more successful (much like wearing better clothing)

You feel more prepared for opportunities

You feel more prepared for contingencies

I was in Sudbury recently with my friend Mike (whose preteen daughter apparently reads this blog !?!). He likes paying by credit card but couldn't: someone stole the credit card machine from the taxi. I used cash and had plenty left over. This saved us from walking or hitchhiking to the airport in -35C weather.

Other Emergencies

On September 11, 2001, I was in Halifax, Nova Scotia delivering a presentation while planes were crashing into the World Trade Center. We didn't know until an organizer interrupted just as I finished. At that point, we were all numb. How could both towers collapse? What was going to happen next? There was speculation that the phone systems (land/cellular) and the Internet were going to be shut down to prevent the terrorists from communicating. The power grid could be shut down. The financial system could be shut down to prevent terrorists from transferring money. Very confusing. Very hard to tell what would happen next.

In a daze, I got directions to a bank and withdrew the maximum permitted (probably $500). There were no line ups. As events unfolded, I didn't need this extra cash. What if I did? What if the bank was closed or had run out of money? Cash would have come in handy.

Conclusions

Carrying more cash works. It seems redundant --- like having a 500 horsepower SUV in the city. If you go offroad, you'll be on a paved sidewalk. You don't need the extra speed either. Even so, the potential gives extra confidence and peace of mind. Unlike an SUV, cash is green (at least in America).

Our first month using Rogers Unlimited Internet is now over (see a review ). There’s more to the story. The monitoring from SamKnows shows...

About

Promod Sharma ("pro-MODE") has devoted his life to insurance. He designed life & health insurance products and then helped advisors sell them. In February 2007, Promod started started this blog to share insider insights directly with you. This lead to requests for help and the launch of the Taxevity Insurance Advisory.

If you want personal help in the Greater Toronto Area, reserve time to Learn About Life.